[Federal Register: December 7, 1999 (Volume 64, Number 234)]
[Notices]               
[Page 68356]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07de99-61]                         

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FEDERAL RESERVE SYSTEM

 
Federal Open Market Committee; Domestic Policy Directive of 
October 5, 1999.

    In accordance with Sec.  271.5 of its rules regarding availability 
of information (12 CFR part 271), there is set forth below the domestic 
policy directive issued by the Federal Open Market Committee at its 
meeting held on October 5, 1999.\1\ The directive was issued to the 
Federal Reserve Bank of New York as follows:
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    \1\ Copies of the Minutes of the Federal Open Market Committee 
meeting of October 5, 1999, which include the domestic policy 
directive issued at that meeting, are available upon request to the 
Board of Governors of the Federal Reserve System, Washington, D.C. 
20551. The minutes are published in the Federal Reserve Bulletin and 
in the Board's annual report.
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    The information reviewed at this meeting suggests that the 
expansion of economic activity was substantial in the quarter just 
ended. Nonfarm payroll employment increased briskly through August, and 
the civilian unemployment rate dropped back to 4.2 percent, matching 
its low for the year. Industrial production was up appreciably further 
in July and August. Total retail sales posted sizable gains over the 
two months. Housing construction apparently has slowed somewhat but has 
remained at a high level. Available indicators suggest that the 
expansion in business capital spending has continued to be rapid. The 
nominal deficit on U.S. trade in goods and services widened in July 
from its average in the second quarter. Inflation has continued at a 
moderate pace, albeit somewhat above that in 1998 owing to a sharp 
rebound in energy prices.
    Most short-term interest rates have posted small mixed changes 
since the meeting on August 24, 1999, while longer-term yields have 
risen somewhat. Most measures of share prices in equity markets have 
registered sizable declines over the intermeeting period. In foreign 
exchange markets, the trade-weighted value of the dollar has changed 
little over the period in relation to the currencies of a broad group 
of important U.S. trading partners.
    M2 and M3 have continued to grow at a moderate pace. For the year 
through September, M2 is estimated to have increased at a rate somewhat 
above the Committee's annual range and M3 at a rate just above the 
upper end of its range. Total domestic nonfinancial debt has continued 
to expand at a pace somewhat above the middle of its range.
    The Federal Open Market Committee seeks monetary and financial 
conditions that will foster price stability and promote sustainable 
growth in output. In furtherance of these objectives, the Committee 
reaffirmed at its meeting in June the ranges it had established in 
February for growth of M2 and M3 of 1 to 5 percent and 2 to 6 percent 
respectively, measured from the fourth quarter of 1998 to the fourth 
quarter of 1999. The range for growth of total domestic nonfinancial 
debt was maintained at 3 to 7 percent for the year. For 2000, the 
Committee agreed on a tentative basis in June to retain the same ranges 
for growth of the monetary aggregates and debt, measured from the 
fourth quarter of 1999 to the fourth quarter of 2000. The behavior of 
the monetary aggregates will continue to be evaluated in the light of 
progress toward price level stability, movements in their velocities, 
and developments in the economy and financial markets.
    To promote the Committee's long-run objectives of price stability 
and sustainable economic growth, the Committee in the immediate future 
seeks conditions in reserve markets consistent with maintaining the 
federal funds rate at an average of around 5-1/4 percent. In view of 
the evidence currently available, the Committee believes that 
prospective developments are more likely to warrant an increase than a 
decrease in the federal funds rate operating objective during the 
intermeeting period.

    By order of the Federal Open Market Committee, November 24, 
1999.
Donald L. Kohn,
Secretary, Federal Open Market Committee.
[FR Doc. 99-31602 Filed 12-6-99; 8:45 am]
BILLING CODE 6210-01-F